A new campaign level option allows AdWords advertisers to show desktop text and image ads on the iPhone, the G1 and other mobile devices with full internet browsers.

Google said the ads can point to desktop landing pages so there is no need to create mobile landing pages or ads in mobile formats.

Ads have been running on both devices already, with Google Search showing desktop results pages modified for these phones. Recently, the Google mobile team launched new results pages formatted specifically for the iPhone. Now, advertisers will be able to display ads exclusively on these mobile devices, create campaigns for them, and get separate performance reporting.

Last month industry analysts warned that predictions and claims about the roaring success of mobile advertising in European markets are hugely inflated.

Research firm CCS Insight predicts that advertisers will spend fairly insignificant amounts trying to reach people through their mobile phones over the next few years.

By 2010, the firm forecasts that mobile advertising revenue in Europe will total less than Eur430m – a fraction of the billions devoted to advertising budgets annually.

“The reality is that no one’s making huge sums from mobile advertising in Europe, and this won’t change in the near future,” said Paolo Pescatore, director of applications and content at CCS. “Some analyst houses are predicting we’ll see a massive surge in mobile ad revenue, but our research shows the sums involved are still relatively small. Anyone expecting to become the next Google on the back of mobile advertising is going to be disappointed.”

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